Federal budget not convincing says WA Premier

Speaking on 720 Perth Mornings, Mr Barnett described the budget in broad terms as "not good news and not convincing".

As well, he sees some of the growth and unemployment forecasts for the Australian economy as "overly optimistic".

"The Federal government has failed to take advantage of the mining boom," says Mr Barnett.

Furthermore, he believes that the Commonwealth is placing undue reliance on the mining industry and therefore on a state like Western Australia to carry the rest of the economy,

"It won't, it's not capable of that." The mining industry has "slowed down significantly", he adds.

"Apart from that I'm reasonably pleased about announcement on transport."

Looking at Budget particulars, Mr Barnett confesses himself pleased with announcements on transport.

"One thing that did please me out of last night's Federal budget was a significant commitment to the Great Northern Hwy and the North West Coastal Hwy which take an enormous amount of heavy vehicle traffic relating to mining.

However, the Premier saw no joy in the budget on projections of GST distribution.

"That is the biggest constraint on the finances of the state government and it is the biggest constraint on the development of Western Australia, including the development of the mining industry itself."

"That's a big drop. In practical terms, West Australia for this coming financial year will get $400m less than it got this year.

"The Northern Territory will be getting more but we have ten times their population."

Currently, WA share stands at $3bn per year, "a small share compared to other states," says the Premier.

Looking ahead four years, with no change, Mr Barnett forecasts a state share of just $1bn."

At that rate, GST will no longer be relevant as a revenue source for Western Australia, he states.

Mr Barnett agrees that a coalition federal government is unlikely to offer a better deal.

"If it continued it would mean that the Federal Government has abandoned Western Australia and is denying the state of its rightful share.

"The state would have no choice but to significantly increase taxes and there will be virtually no relationship between Canberra and Western Australia on financial matters because there will be no money.

Looking ahead to the state budget in August, the government is doing all it can to avoid the possibility of a deficit. "I think we will succeed in doing that."

"We don't want to increase taxes in the short term as the economy is weakening."

However, $400m has been taken off the states bottom line, says Mr Barnett. "We have to make that up."

"People will directly see the result of Canberra reducing not only our share, but our absolute amount of money."

The government is considering expenditure and public sector cuts though no decisions have been make at this stage.

The government is considering long term structural change in the public sector, says Mr Barnett and expects to announce new policy over the next few weeks.

"We need to act now to avoid mass loss of jobs either in the private or the public sector."